9911796707
TMI Blog1985 (5) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... supporting bills and vouchers in respect of the above payment may be produced before him. The assessee replied to the ITO stating inter alia, as follows: "The CIT of Rs. 11,875 and Rs. 30,000 were paid to Mr. A. N. Shukla and Sunder Electric Mart by A/c Payee Cheque. The CIT were paid for securing order precursed by them." The assessee did not produce before the ITO either supporting evidence or details regarding the nature of orders procured by the above two parties in support of the above claim. The ITO, therefore, inferred that the above amount could not be accepted as a legitimate deduction from the total income in the absence of any details in support thereof. The above order or the ITO was upheld in appeal both by the CIT (A) and the Tribunal. The CIT (A) made the following observations while upholding the order of the ITO: "The only justification for paying these amounts has been given as a Board's resolution authorising these payments. Regarding the nature of the payment the only evidence was letter dt. 23rd Sept., 1981 by the appellant to M/s Price Waterhouse Co. Stating that their commission of Rs. 41,875 paid to M/s Sunder Electric Mart (P) Ltd and Shri A. N. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or payment by cheque does not prove the genuineness of claim for special commission. Nor can it be said to constitute the service rendered. Allowability or otherwise of the claim for special commission depends on question of fact and no point of law is involved therein. As the assessee has failed to produce any evidence regarding the justification or necessity for payment of special commission, I am of the opinion that it was not a genuine business expenditure and that the assessee could not entertain a bone fide belief that it was so. The assessee has failed to substantiate the explanation offered in support of the claim and this amount is deemed to represent the income in respect of which particulars have been concealed within the meaning of Explanation I to s. 271 (1) (c). I, therefore, held that with regard to this claim for expenses of Rs. 41,875 on account of special commission (as alleged) the assessee is guilty of concealment of particulars of income in the matter of reducing its income by the said amount and consequently reducing its liability for income-tax thereon and the provision of s. 271 (1) (c) r/w Explanation-I are clearly attracted" 4. The assessee challenge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1st April, 1976, the onus of proving the mens rea no more lay with the ITO as presumed by the ld. CIT (A). The ITO had merely to show that in respect of any facts material to the computation of total income of the assessee, the explanation offered by the assessee could not be substantiated by him. An explanation is substantiated by leading cogent evidence. When there is no evidence in support of an explanation, it cannot be said that the fact has been proved or substantiated. Once the ITO was able to show that the assessee did not substantiate the explanation given by him, the assessee was caught within the aforesaid Explanation and it had to be presumed by the fiction of law that there was concealment of income. It is upon the assessee to show in terms of the aforesaid provision that the explanation given by the assessee was bona fide and that all the facts relating to the same and material relevant to the computation of his total income had been disclosed by him before the ITO. The assessee has not been able to prove the aforesaid position. Admittedly, the assessee had not disclosed all the material which was necessary for the computation of the total income and had not brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the aforesaid decisions, which were in the context of the Explanation to s. 271 (1) (c) as it stood upto 31st March, 1976. 8. We have given careful consideration to the facts of the case and the rival submissions. In our opinion there is merit in the contention of the ld. Departmental Representative. Every payment is not an expenditure and in order to show that certain payment was expenditure, the onus lay on the assessee. In the present case, the assessee has not been able to substantiate his explanation that the aforesaid amounts were paid by the assessee for services rendered to the persons mentioned above. Neither the assessee has been able to indicate the details of the sales, the orders of which were procured by the aforesaid persons, nor the assessee has been able to indicate the names of the parties to whom the sales in question were made. The assessee did not disclose what was the actual nature of the activities and the services rendered by the aforesaid two person for which they were remunerated by the assessee. No doubt, a resolution of the Board of Directors is on record supporting the said payments on the ground of alleged services out the resolution of the Boa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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